Draft N.Y. Rule Updates Would Expand Guidance on Key Confidentiality Issues

By Joan C. Rogers

Jan. 9 — Under proposed rule updates developed by the New York State Bar Association's rules-drafting committee, New York lawyers would have additional guidance—beyond what recent updates to the ABA Model Rules provide—about the duty to safeguard client information and the scope of permitted disclosures in the context of lateral moves and law firm mergers.

The bar's Committee on Standards of Attorney Conduct (“COSAC”) issued a report Dec. 23 with its draft proposals for possible amendments to the New York Rules of Professional Conduct and related comments in light of changes the ABA made to the Model Rules of Professional Conduct resulting from the work of its Commission on Ethics 20/20.

The report compares COSAC's proposed amendments with the Ethics 20/20 updates and explains the committee's rationale for proposing to modify, amplify, reword or omit some of the Model Rule changes.

COSAC chair Roy D. Simon told Bloomberg BNA that the committee welcomes comments from people wherever they practice law. Comments may be sent by March 13 to roy.simon@hofstra.edu, with “COSAC” or “20/20” in the subject line.

The report will be presented to the state bar House of Delegates Jan. 30 solely for informational purposes, and the delegates are expected to debate and vote on March 28, Simon said.

As the report makes clear, changes to the black-letter rules can be made only by the New York state court system's four appellate divisions. However, the comments to the rules are the product of the state bar itself and can be amended by the bar without court approval.

Disclosure in Mergers, Lateral Moves

COSAC decided not to recommend the new exception in Model Rule 1.6(b)(7) that permits disclosure to detect and resolve conflicts of interest in lateral moves or law firm mergers.

This new exception is not necessary or desirable in New York because the state's definition of confidential information is narrower than the one the ABA uses, the report indicates.

However, COSAC concluded that New York lawyers do need more guidance about restrictions on permissible disclosures when lawyers and law firms consider lateral moves or law firm mergers. The report sets out proposed new comments to Rule 1.6 on that subject.

According to the report, COSAC's proposed comments differ in at least three significant ways from the ABA comments that explain Model Rule 1.6(b)(7):

• COSAC's suggested comments address how the duty of confidentiality applies to disclosures in the lateral and merger contexts, rather than addressing the scope of an exception to confidentiality.

• COSAC's draft comments suggest good practices for limiting the disclosures surrounding moves and mergers even when those disclosures are permitted under the confidentiality rule.

• “New York’s proposed Comments offer guidance not only for disclosures of information needed to check for conflicts, but also for disclosures of information needed to enable lawyers and law firms to assess the financial and strategic concerns relevant to going forward with a prospective lateral hire or a law firm merger,” the report states. 

Because New York's Rule 1.10 (imputation of conflicts of interest) contains provisions requiring law firms to check for conflicts of interest, COSAC also drafted new comments to that rule on confidentiality and conflict-checking in lateral and law firm merger contexts.

Safeguarding Client Info

COSAC recommended an expanded version of new Model Rule 1.6(c) on safeguarding client information, to replace New York's current rule on that subject.

COSAC's draft Rule 1.6(c) would require lawyers to “make reasonable efforts to prevent the inadvertent or unauthorized disclosure or use of, or unauthorized access to, information protected by Rules 1.6, 1.9(c), or 1.18(b), or protected by law or court order.”

The proposed comments accompanying COSAC's draft rule go beyond the ABA comments to reflect the broader reach of the suggested New York version, the report says.

Full text of the report at http://op.bna.com/mopc.nsf/r?Open=jros-9sh4kl.

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.

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